Innovation in the Midst of COVID-19

Innovation in the Midst of COVID-19

At S2G Ventures, our mission is to back the best entrepreneurs that are improving the overall health and sustainability of the food system. Now, with the coronavirus outbreak escalating, our mission is more important than ever.


As we track the escalation of the pandemic and retreat inside to shelter in place, consumers across the globe are nervous about their ability to feed their families. Never in our lifetimes has there been such national attention on our food system and its ability to provide for the global population.


While there are certainly many challenges ahead, we believe we have an important role to play in investing behind entrepreneurs that can solve today’s problems in a way that can have far-reaching positive impacts. Innovators in the food and agriculture industry have been working for decades on solutions that can lead not only to food security, but also to healthier people and a healthier planet.


At S2G we are supporting companies working across the food supply chain to achieve a better future. We believe that the world can be a better place as we emerge from this pandemic if we continue to support the entrepreneurs who are catalysts for out-of-the-box thinking, and who can bring the pace and agility of change needed right now.


Due to the coronavirus, there has been a focus on the impact on the consumer, the economy and the political environment. These factors will drive continued innovation that we believe are especially critical to build a more resilient food system.


Decentralized supply chain models

The COVID pandemic has raised many concerns about the stability and resilience of the food system. Despite recent surges in demand and short term supply challenges, food supplies have been adequate to date. However, similar to the Ebola outbreak in 2014, we may see more dramatic increases in the prices of foods and disruptions in the supply chain. Food and food security may see further challenges due to future export restrictions, market speculation and panic behavior. The United Nations’ Food and Agriculture Organization said the world risks a “looming food crisis” unless measures are taken to protect the most vulnerable, keep global food supply chains alive and mitigate the pandemic’s impacts across the food system.


As we look towards the world post-pandemic, we believe increased attention and focus will be placed on building more resiliency into the U.S. food system. Innovations in the areas of indoor agriculture and alternative proteins will be even more critical components of our future food system.


Controlled environment systems allow for produce growing to be optimized for flavor, nutrition, and freshness rather than for survival through a long supply chain. And they provide another means to reinforce the supply chain because they allow for consistent production domestically that is uninterrupted by weather and climate change.


Shenandoah Growers, for example, provides scaled, reliable production to national retailers at competitive prices. Multiple major U.S. retailers have turned to Shenandoah Growers to help meet consumer demand for local and organic produce while reducing their supply chain risks through year-round local produce production. As they expand into new partnerships and product lines, they are working to further connect their operations to the communities that consume their produce, and in turn cut back on waste and freight expenses.


Many new technologies are being developed to optimize the production process to further reinforce the viability of indoor agriculture. Research and development is being done to explore how LED lights can be used to control how plants grow and potentially even their taste, levels of nutrients and shelf life. Sophisticated IoT sensors can now enable remote monitoring and control of light, temperature, water, and air systems. New SaaS platforms, powered by artificial intelligence, enable growers to experiment with and optimize inputs. The result of these new technologies is that growers can reduce costs, increase productivity and achieve faster crop cycles, all while reducing their energy and water consumption. A virtual tour of IGS’s demonstration lab near Dundee, Scotland provides a visualization of how these technologies come together in an indoor agriculture system.


Alternative protein production, such as plant-based proteins and cell-based meats, are another way to create a more resilient and decentralized supply chain and reduce the environmental impacts of current meat production processes at the same time.


As an example, Future Meat Technologies offers a cost-effective solution for cellular agriculture that is scalable and sustainable by design, making cell based meat a viable option for meat that can be produced anywhere they stand up facilities.


Safety and Traceability

Google Trends data shows that search volume for “Food Safety” related terms are at an annual peak this week and that consumers are looking for information on food safety as it relates to coronavirus with terms like “food safety coronavirus” and “is takeout food safe” rising to the top. This interest has resulted in media outlets from Consumer Reports to U.S News covering the topic. While the FDA has stated that COVID is not transmitted through food, consumers are looking for assurances which we believe will raise greater awareness and concern about the origin and safety of food.


It has always been our view that our future food system should provide much greater accountability to all stages of the supply chain and that new business models, technologies and data are a critical part of the solution. We have invested in innovative companies aimed at increasing the transparency of the origin of food, how it is processed and transported.


Our portfolio company, Ataraxis, offers a solution that can test meat quickly and accurately at a lower cost than existing mass spectroscopy approaches. This type of technology has the potential to radically transform the way meat is verified at each step of the production process, allowing restaurants and brands to be confident in the claims they make and ensuring that any contamination is caught before it reaches consumers.


Another example is Safetraces which provides edible DNA barcodes that can be placed directly on fresh produce, bulk commodities and medicines to verify their source. This technology eliminates reliance on packaging labels for verification which can be easily altered.


Many brands are also connecting consumers directly to farmers to provide transparency into how, and by whom, food is produced. For example, Shenandoah Valley Organic allows consumers to enter the farm I.D. associated with their chicken products online and see the farm where it was raised, photos and biography on the farmer.


In a recent article, Erik Malmstrom CEO of Safetraces says, “Groundbreaking technologies like ours and others have the potential to dramatically enhance the safety and security of our food system in good times and bad. However, this potential will only be realized if the food industry is incentivized and compelled to modernize by consumers and regulators, and to bring technology off the sidelines and into the fight.”


We join Erik in hoping that consumers will be the drivers for food safety reform enabled by new and innovative technologies.


Changing purchase behaviors

It’s no surprise that online grocery is on the rise. Instacart announced they are looking to hire 300,000 grocery shoppers to meet the surge in demand, New research from Brick Meets Click and ShopperKit shows that 31% of US households have used online grocery services in the last month, including many new users over 60 years of age.


We believe once consumers begin interacting with online channels in new ways these behaviors will become part of the collective new normal. We expect that an omnichannel retail approach will be more important than ever with concepts such as online ordering and pick-up, delivery, ghost kitchens, subscriptions and potentially a resurgence in meal kits as growing channels. Our team will explore this topic further, highlighting innovations from our companies such as sweetgreen, Everytable and Good Eggs, in a future article dedicated to the Future of Retail.


At S2G, we believe passionately that a healthier food system can solve many of our critical global challenges. The coronavirus pandemic has reinforced the importance and urgency of our mission. Over the coming weeks, we will deep dive into the themes introduced there through follow-up articles on our blog and interviews in our new podcast - Where We Grow From Here.


We hope by sharing our vision of the future with you, you will be inspired to join us in the journey towards a better food system.


ABOUT THE AUTHOR

Aaron Rudberg

Managing Director

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